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Why Trade CFDs?
A CFD (Contract for Difference) is an agreement to exchange the difference in value of the underlying instrument (a share, e.g.) between the time at which the order is opened and the time at which it is closed.
Geared products like CFDs can help you make the most effective use of your investment capital, but it is important to appreciate that the amount you could lose relative to your initial investment is greater for geared products than for non-geared products.
CFDs are margin traded products. Thus, you only deposit a fraction of the overall value to trade the full contract value of the product allowing you to make a much larger potential investment. Just like physical shares your profit or loss is determined by the difference between the price you buy at and the price you sell at. Margin levels required by City Credit Capital will vary between CFD products.
Example
A client wants to purchase £10,000 worth of HSBC shares, the margin requirement would be only £1,000. If the HSBC share value increases to £10,500, a £500 profit on the deal would equate to just a 5% return if you traded the shares outright, compared to a return of 50% on a CFD.
By using margin investors can increase the effectiveness of their investments and achieve returns on investment that are otherwise unattainable.
Here at CCC we offer CFDs on a comprehensive range of underlying products, including global indices, futures, commodities and currencies.
